Q. With prices still falling, how do I tell when it’s a good time to buy?
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A. Right now, much depends on whether you are a cash buyer, or whether you need to sell first in order to buy.
With serious buyers in fairly short supply at the moment, there are definitely deals waiting to be done – and as a cash buyer you would obviously be in a very strong negotiating position. On the other hand, you could always hang on a bit longer, in the hope of picking up an even better bargain. However, this can be a risky strategy – firstly, because some other cash buyer might come along in the meantime, and snaffle the very home you’ve got your eye on, and secondly, because you could easily leave it too late. The fact is, the only time anyone can be absolutely certain that prices have bottomed out is when they start going up again!
So, if you are a cash buyer, then my advice would be to buy now – and try not to fret over whether you might have been able to save a bit more by waiting a few months. Yes, prices may well drop further before they start to recover, but if you view property as a long-term investment – or better still, as somewhere to call home – then this really shouldn’t bother you.
Then again…if you need to sell somewhere else in order to buy, then much depends on whether you are trading up or down. If it’s the former, then this is actually a very good time to make your move. That might sound counter-intuitive, given all the economic doom and gloom, but with prices going down you will actually save more on the larger, more expensive property you are buying than you notionally lose on the smaller one you are selling.
Of course, if you are contemplating moving to a smaller property, then the reverse is also true. All things being equal, it is always better to downsize when prices are on the increase. So, if this is the case, there is definitely an argument for hanging on until the market starts to pick up again.
Nevertheless, when all’s said and done, there’s still no denying that there are a lot of very attractive bargains out there, right now!